The Non-Linking of PAN (Permanent Account Number) with Aadhar has become a serious problem to many Catergoes / Class of Taxpayers as well as Tax Deductors like:

1. Property Buyers - Where property value is 50 Lac.
2. Car Sellers where Car Value exceeds INR 10 Lac
3. Contractors
4. IT Professionals
5. Freelancers
6. Business Persons
7. Salaried Person
8. Others whose TDS Deducted / Deductors.

-------------

Circular No.6 12024

F. No. 275/4/2024-IT(B)

Government of India

Ministry of Finance

Department of Revenue

Central Board of Direct Taxes

New Delhi, the 23 April, 2024

Sub: Partial modification of Circular No. 3 of 2023 dated 28.03.2023 regarding consequences of PAN becoming inoperative as per rule 114AAA of the Incomet-tax Rules, 1962- reg.

Circular No. 3 of 2023 dated 28.03.2023 issued by the Board details the consequences of PAN becoming inoperative as under:

"Consequent to the notification substituting rule 114 AAA of the Income-tax Rules, 1962 (the Rules) vide notification no. 15 of 2023 dated 28th March, 2023, it is hereby clarified that a person who has failed to intimate the Aadhaar number in accordance with section 139AAA of the Income-tax Act, 1961 (the Act) read with rule 114AAA shall face the following consequences as a result of his PAN becoming inoperative:

(i) Refund of any amount of tax or part thereof, due under the provisions of the Act shall not be made to him;

(ii) Interest shall not be payable to him on such refund for the period, beginning with the date specified under sub-rule (4) of rule 114AAA and ending with the date on which it becomes operative;

(iii) where tax is deductible under Chapter XVII-B in case of such person, such tax shall be

deducted at higher rate, in accordance with the provisions of section 206AA;

(iv) where tax is collectible at source under Chapter XVII-BB in case of such person, such tax shall be collected at higher rate, in accordance with the provisions of section 206CC. "

2. As per sub-rule (4) of rule 114AAA of the Income-tax Rules, 1962, the above consequences shall have effect from the date specified by the Board. The Board vide Circular No. 03 of 2023 dated 28th March, 2023 had specified that the consequences shall take effect from 1 st July, 2023 and continue till the PAN becomes operative.

2. Several grievances have been received from the taxpayers that they are in receipt of notices intimating that they have committed default of 'short deduction / collection' of TDS/TCS while carrying out the transactions where the PANs of the deductees / collectees were inoperative. In such cases, as the deduction / collection has not been made at a higher rate, demands have been raised by the Department against the deductors/collectors while processing of TDS/TCS statements under section 200A or under section 206CB of the Act, as the case maybe.

3. With a view to redressing the grievances faced by such deductors/collectors, the Board, in partial modification and in continuation of the Circular No. 3 of 2023, hereby specifies that for the transactions entered into upto 31.03.2024 and in cases where the PAN becomes operative (as a result of linkage with Aadhaar) on or before 31.05.2024, there shall be no liability on the deductor / collector to deduct/collect the tax under section 206AA/206CC, as the case maybe, and the deduction/collection as mandated in other provisions of Chapter XVII-B or Chapter XVII-BB of the Act, shall be applicable.

(Sunil Kumar)

Under Secretary to the Government of India Tele: 23095478

------------

HIGHLIGHTS OF ABOVE CIRCULARE / RESOLUTIONS

Purpose of Circular :

• This Circular is a Partial Modification of Consequences of non linking of PAN with aadhar to give relife to tax deductors.

Tax Notice Resolutions :

• For those who receive notice for short deduction or collection of tax are advisable to ensure about PAN – Aadhar linking of deductees before the specified dates.

• Action must be taken to link pan with Aadhar on or before 31/05/2024 to avoid Differential higher TDS / TCS.

What need to take care Post 01/04/2024

• For Transaction occurring on or after 01/04/2024, it is mandatory to ensure linkage of pan and aadhar.

• Such relief may not come again – so do the prompt action

Click here to Know PAN - AADHAR LINK STATUS

FEW QUESTIONS YET TO RESOLVE

-----------------------------------------------------------------------------

1. What happened to salaried person whose TDS is deducted at higher rate but they will not not get credit for the same in for 26AS / AIS / TIS due to non linking of PAN with Aadhar. Do they need to pay income tax again on their income while filing Income Tax Returns.

2. What happned to Tax deductors who already paid differencial TDS amount. Do they get Tax Refund for the same.

3. What happned if Duductee denied to pay TDS difference.

4. What happned if Deductee is untraceable after transaction took place.

5. What happned abount Tax Demand Notice to Property Buyers, Car Sellers where high value Transaction involved.

COMMENTS BELOW ALL OF YOUR DOUBTS AND QUESTIONS